Correlation Between General Electric and Fresenius Medical
Can any of the company-specific risk be diversified away by investing in both General Electric and Fresenius Medical at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining General Electric and Fresenius Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Electric and Fresenius Medical Care, you can compare the effects of market volatilities on General Electric and Fresenius Medical and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in General Electric with a short position of Fresenius Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Electric and Fresenius Medical.
Diversification Opportunities for General Electric and Fresenius Medical
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between General and Fresenius is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding General Electric and Fresenius Medical Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresenius Medical Care and General Electric is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on General Electric are associated (or correlated) with Fresenius Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresenius Medical Care has no effect on the direction of General Electric i.e., General Electric and Fresenius Medical go up and down completely randomly.
Pair Corralation between General Electric and Fresenius Medical
Assuming the 90 days trading horizon General Electric is expected to generate 1.86 times less return on investment than Fresenius Medical. But when comparing it to its historical volatility, General Electric is 1.74 times less risky than Fresenius Medical. It trades about 0.12 of its potential returns per unit of risk. Fresenius Medical Care is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 10,945 in Fresenius Medical Care on December 25, 2024 and sell it today you would earn a total of 2,766 from holding Fresenius Medical Care or generate 25.27% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
General Electric vs. Fresenius Medical Care
Performance |
Timeline |
General Electric |
Fresenius Medical Care |
General Electric and Fresenius Medical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with General Electric and Fresenius Medical
The main advantage of trading using opposite General Electric and Fresenius Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Electric position performs unexpectedly, Fresenius Medical can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Fresenius Medical will offset losses from the drop in Fresenius Medical's long position.General Electric vs. Multilaser Industrial SA | General Electric vs. Nordon Indstrias Metalrgicas | General Electric vs. CVS Health | General Electric vs. Take Two Interactive Software |
Fresenius Medical vs. METISA Metalrgica Timboense | Fresenius Medical vs. United Natural Foods, | Fresenius Medical vs. Take Two Interactive Software | Fresenius Medical vs. Nordon Indstrias Metalrgicas |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
Stocks Directory Find actively traded stocks across global markets |